client onboarding move to channel of choice and reap rewards
TRANSCRIPT
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Client Onboarding: Move to Channel of
Choice and Reap Rewards
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TABLE OF CONTENTSINTRODUCTION .............................................................................................................................................. 4
METHODOLOGY ........................................................................................................................................ 5
THE CASE FOR MULTICHANNEL CLIENT ONBOARDING TODAY ...................................................................... 7
BARCLAYS LEVERAGES TABLET DEVICES TO DEPLOY SELF-SERVICE ONBOARDING .................................. 8BANKS' CURRENT ONBOARDING CHALLENGES AND IMPROVEMENT OPPORTUNITIES ................................. 9
RETAIL BANK ............................................................................................................................................. 9
WEALTH MANAGEMENT DIVISON .......................................................................................................... 10
MORTGAGE DIVISION ............................................................................................................................. 11
SEVEN ATTRIBUTES OF A MATURE AND CLIENT-FOCUSED ONBOARDING PROCESS ................................... 14
EFFICIENT: TARGET ACCOUNT OPENING CYCLE TIMES .......................................................................... 14
RETAIL DEPOSITS ............................................................................................................................... 14
BROKERAGE ....................................................................................................................................... 15
AUTOMATED WORKFLOW ...................................................................................................................... 16
RETAIL BANKS .................................................................................................................................... 16
WEALTH MANAGEMENT ................................................................................................................... 17
MORTGAGES ..................................................................................................................................... 17
MULTICHANNEL WORKFLOW ................................................................................................................. 18
THE BENEFITS OF MULTICHANNEL ONBOARDING TO THE WEALTH MANAGEMENT INDUSTRY ..... 20
CLIENT AWARENESS ................................................................................................................................ 22
EXTRACTS DATA FROM PHYSICAL DOCUMENTS ..................................................................................... 23
VISIBLE AND RESPONSIVE ....................................................................................................................... 24
CONSISTENT ACROSS BUSINESS LINES AND CHANNELS ......................................................................... 25
CONCLUSION ................................................................................................................................................ 26ABOUT KOFAX ............................................................................................................................................... 27
ABOUT AITE GROUP...................................................................................................................................... 28
LIST OF FIGURES FIGURE 1: SMARTPHONE AND TABLET ACCESS TO FINANCIAL INFORMATION, BY GENERATION ................. 4
FIGURE 2: MOST IMPORTANT BUSINESS DRIVERS SHAPING PRIVATE BANK TECHNOLOGY BUDGETS IN
2013 ...................................................................................................................................................... 7
FIGURE 3: BANKS AIM FOR TECHNOLOGY TO IMPROVE MORTGAGE LOAN ORIGINATION PROCESSING ... 13
FIGURE 4: BROKERAGE AND MANAGED ACCOUNT PROCESSING TIMES IN THE UNITED STATES................ 15
FIGURE 5: STATE OF WORKFLOW AUTOMATION IN U.S. BROKERAGE ACCOUNTS ..................................... 17
FIGURE 6: MORTGAGE-ORIGINATION PROCESS ........................................................................................... 18
FIGURE 7: AVAILABILITY OF ONLINE ONBOARDING CAPABILITIES FOR INVESTMENT ACCOUNTS .............. 20
FIGURE 8: BENEFITS OF PROVIDING ONLINE ACCOUNT OPENING CAPABILITIES THROUGH THE CLIENT
PORTAL: WEALTH MANAGEMENT FIRMS WITH ONLINE ACCOUNT OPENING VS. FIRMS WITHOUT . 21
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FIGURE 9: FINANCIAL ADVISOR APPLICATIONS AVAILABLE ON TABLET DEVICESU.S. FINANCIAL ADVISORS
............................................................................................................................................................. 22
FIGURE 10: CLIENT AWARENESS MATURITY LEVEL FOR ONBOARDING ....................................................... 23
FIGURE 11: ADVISOR FIRM SATISFACTION CORRELATES WITH HIGH ACCOUNT OPENING PROCESS
VISIBILITY ............................................................................................................................................. 25
LIST OF TABLESTABLE A: BARCLAYS ONBOARDING INITIATIVES IN EUROPE AND AFRICA ..................................................... 8
TABLE B: NEW RULES AND REVISIONS DRIVE UP ONBOARDING COSTS, NO END IN SIGHT ........................ 11
TABLE C: MULTICHANNEL APPROACH TO ONBOARDING WORKFLOW ........................................................ 19
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INTRODUCTION
Bank customers have become used to accessing the information and applications they want
through their device and channel of choice. This same choice should be available when it comes
time for customers to apply for products and services at their bank. Many banks still continue to
require a branch-based or in-person application process, particularly on the investment andlending sides of the business. While requiring a customer or prospect to visit a branch to start
onboarding may provide the best outcome for the firm, from a sales and regulatory (i.e. Know
Your Customer regulations) standpoint, banks are likely to lose opportunities to competitors that
offer a more flexible onboarding process that fits a customer's preferred way of engaging with
their bank. For example, Generation Y customers are more likely than older generations to prefer
completing an application on a mobile device, particularly on a tablet.
In a December 2011 Aite Group online survey of 1,014 U.S. investors, almost all of the
Generation Y investors surveyed indicated using a smartphone to access financial information
and one-third did so using a tablet device. By contrast, only 11% of older baby boomers and
silent generation investors were accessing financial information through smartphones and 5%through tablet devices (Figure 1). Smartphone and tablet adoption for financial management is
much higher today, more than a year following the survey, but generational differences are
unlikely to have changed.
Figure 1: Smartphone and Tablet Access to Financial Information, by Generation
Source: Aite Group survey of 1,014 U.S. investors, December 2011
49%
25%
14%22%
5% 6%
30%22%
14% 14%
5% 5%10% 7%
12%7%
1% 3%5% 5% 6% 3% 1% 2%
iPhone Android Phone BlackBerry Apple iPad Other smartphonedevice
Other tablet device
Q. Through which smartphone or tablet devices do you access financial information?(1,014 investors holding at least US$25K in investable assets)
Generation Y (21 to 31, n=241) Generation X (32 to 46, n=302)
Yo un g Bo omer (47 to 57, n =227) Old er Bo omer an d Silent Gen. (58 an d o lder, n =244)
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Onboarding is a critical process in the client life cycle as it sets the stage for the rest of the
customer relationship. Banks that require too rigid an onboarding process may leave first-time
customers with a poor impression of the firm, thereby reducing their appetite to conduct more
business with the bank after the first account setup or loan approval. Past Aite Group research
has shown that more cross-selling takes place within the first 90 days of a client relationship
than at any other time in the client life cycle. Clients are more likely to be attentive to newproducts and services when they are already undergoing a change in their financial lives, and
delivering a positive onboarding experience to clients maximizes these revenue opportunities.
Providing customers with the ability to apply for bank and investment products through Web
and mobile devices is not only about adapting to customers' preferencesthese initiatives also
result in significant cost savings for banks in the form of reducing manual, low-value-added work
for sales and service representatives, loan officers, and financial advisors. Leveraging mobile
devices and Web forms to capture data and documents allows banks to convert essential
information and documents into an electronic format more quickly, thus speeding up the entire
onboarding workflow. Achieving efficiency during the onboarding process has become a
necessity not only to meet clients expectations and preferences, but also to comply with the
growing number of regulatory requirements which impact the onboarding process to protect
customers and firms from taking undue risks (e.g. product suitability requirements, FATCA, new
mortgage origination and closing documentation requirements etc.). In an ideal world, a
multichannel onboarding workflow would allow front-facing staff to learn of any errors,
regulatory risks, and sales opportunities within minutes of submitting client information,
allowing them to focus on delivering an optimal and tailored client experience immediately.
This white paper examines the strategic value of investing in mobile and Web-based onboarding
capabilities to achieve banks' current priorities of improving the client experience, restoring
profitability, and meeting regulatory requirements. The report reviews banks' current and
expected onboarding challenges (both for new-to-bank and existing clients) and illustrates the
components of a mature and customer-focused onboarding process.
METHODOLOGY
This white paper is based on ongoing, in-depth Aite Group discussions with senior management
at global banks from mortgage, retail, commercial, and wealth management departments. The
analysis is also based on the following Aite Group surveys and interviews:
Interviews with executives at 10 of the 30 largest private banks and wealth
management firms in North America based on assets conducted in Q1 2013
A global survey of executives at 54 banks with more than US$10 billion in assets, Q22012
Surveys of U.S. financial advisors, including one survey of 400 advisors conducted in
January 2013 and another survey of 515 advisors conducted in March 2012. The
financial advisor survey data discussed in this report has a 5% margin of error. Tests
of significance were conducted at the 95% level of confidence.
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A survey of 1,014 U.S. investors conducted in December 2011
Executives contributing to our research have extensive business or IT responsibilities and titles
that include chief technology officer, chief risk officer, chief information officer, executive vice
president, vice president, senior vice president, and director. Also incorporated are results from
discussions with regulators and reviews of government reports, guidance, and industry surveys.
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THE CASE FOR MULTICHANNEL CLIENT
ONBOARDING TODAY
Banks have been challenged since the 2008 crisis with achieving revenue and profitability targets
in a low-growth economic environment. The limited funds that banks have available to invest intechnology initiatives are currently being channeled to meet the short-term objectives of
reducing costs and meeting regulatory requirements. Recent conversations with North American
private bank executives reveal that while the top strategic priority of these firms is to improve
the client and advisor experience, in part through Web and mobile initiatives, the dominant
business drivers of 2013's technology budget are reducing costs and meeting regulatory
requirements. Attracting and retaining clients comes only in second place at many private banks
(Figure 2).
Figure 2: Most Important Business Drivers Shaping Private Bank Technology Budgets in 2013
Source: Aite Group interviews with 10 top 30 private banks and wealth management firms.
As firms struggle with how to deploy limited funds to achieve the three key business objectives
of reducing costs, meeting regulatory requirements, and improving the client experience, they
must prioritize initiatives that can achieve more than one of these objectives. Leveraging mobile
and Web technology to improve onboarding process efficiency and the client experience can
meet all of three.
3 out of 9 firms
1
3
3
2
3
1
1
4
Leading businessdriver of 2013 tech.
budgets
Second most
impo rtant dr iver oftech. budgets
Q. Please rank the following business drivers based on their importance insetting IT priorities for 2013 in the full-service wealth management organizationor the private bank. (n=9 private banks)
Reducing costs
Meeting regulatoryrequirements
Attracting new clients
Retaining/attracting advisors
Retaining clients
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BARCLAYS LEVERAGES TABLET DEVICES TO DE PLOY SELF-SERVICE ONBOARDING
Barclays has recognized the importance of automating the onboarding process to achieve cost
savings and improve the client experience. In the bank's latest investor presentation on its
transformation plans,1
onboarding improvement initiatives were cited as top strategic cost
savings opportunities. Barclays has aggressive plans to reduce annual operating expenses byUS$2.6 billion by 2015 through investments of more than US$4 billion. One of the ways the bank
plans to achieve some of these cost savings is by increasing customers' ability to service
themselves through client-friendly tools and applications available across channels (mobile,
tablet, phone, and branch). The firm estimates that its European instant account opening
initiatives, which are based on using the iPad to open accounts with less staff involvement, can
generate up to US$60 million in cost savings. While the Portugal initiative described in Table A
still requires customers to visit a branch to open an account, distributing the iPad application to
the bank's general customer base will be a trivial undertaking from a technology standpoint.
Table A: Barclays Onboarding Initiatives in Europe and Africa
Barclays
onboarding
initiatives
Description Customer experience Benefits
Africa customer
onboarding
Deployed new customer
onboarding process in 800+
sites
Redesigned/automated
manual processes, e.g.,
identification and verification
through biometrics, image and
workflow, automated
document validation
Shortened home
loan approval cycle
to 4 days from 13
General customer
onboarding
reduced from 5
days to 12 minutes
92% reduction
in back-office
document
validation
times
Europe instant
account opening
In Portugal, deployed 200+
iPads with 200 additional
expected in Q1 2013
Spain and France gradual
rollout in 2013
UK planned for 2013
Onboarding cycle
time reduced from
90 minutes to 30
minutes
20% of accounts
opened within 15
minutes and 95%
in less than 30
minutes
More than 75%reduction in paper
80% reduction
in account
opening FTEs
Potential cost
savings across
Europe would
be up to US$60
million
Source: Barclays Strategic Review presentation, February 12, 2013
1. Barclays Strategic Review, February 12 2013.
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BANKS' CURRENT ONBOARDING CHALLENGES
AND IMPROVEMENT OPPORTUNITIES
This section summarizes the key business model challenges faced by banks today across the
retail bank, wealth management division, and mortgage department. These challenges comefrom the following:
Clients' changed preferences for how they want to purchase financial products and
manage their financestoday, across channels at any time and place they choose
Regulatory requirementsin particular, requirements that aim to protect consumers
from improper investment sales practices and those aimed at reducing poor
mortgage-origination practices
Profitability pressuresbanks have to meet both client needs and regulatory
requirements at a time when budgets and hiring remain modest
RETAIL BANK
Retail banks around the world, especially in Europe and North America, are facing
unprecedented challenges to their business model. In the face of these myriad challenges, retail
banks are looking to reinvent themselves. Many are trying to develop new operating models
based on the customer rather than the transaction, and it often starts with the onboarding
process.
Creation of a better onboarding online experience: The industry is seeing significant
improvements in the online buying experience of all financial services products. In
the past, the experience was often siloed or restricted by product type (depositsversus loans) and not differentiated or rewarded (by new relationships versus loyal
customers, for example). Other industries, such as the retail sector, as well as new
entrants to the banking industry have already impacted customer expectations and
set new standards in the area of online experience. Financial institutions need to
implement greater sophistication at selling via digital channels, enhance greater
cross-sell capabilities in countries where the practice remains limited (e.g., the
United States), and develop new lines of business and financial products altogether.
Banks in Europe are already trying to sell more products online, including more
complex products (e.g., investment products) that require deep customer
knowledge or extensive onboarding experience.
Transformation of the retail branch network: Banks are starting to transform the
branch from a place of transactions to a place for building relationships. The
onboarding process must follow a similar evolution and migrate from an account-
centric process to a relationship-focused one that can adapt to meet a customer's
expectations.
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Dramatic increase in the ability to use data analytics: In order to drive top-line
revenue, banks either have to acquire new clients (at a cost) or increase their share
of wallet from existing customers. Driving sales and managing customer
relationships across all channels with better integration is not possible without a
strong business intelligence product that works in conjunction with the onboarding
solution.
WEALTH MANAGEMENT DIVIS ON
Wealth management firms globally are challenged with meeting more stringent investor
protection regulatory requirements, including enhanced suitability requirements (FINRA 2111 in
the United States, the Markets in Financial Instruments Directive [MiFID II and III] in Europe, and
the U.K. Financial Services Authority's suitability guidance), and determining whether clients
must pay taxes in the United States (FATCA). These new rules have required firms and financial
advisors to gather significantly more information, about clients and prospects to better
understand clients tolerance and capacity to take risks.
In the United States, FINRA 2111 requires financial advisors to capture new information during
the account opening process, including age, investment experience, investment time horizon,
liquidity needs, and risk tolerance. The rule also requires advisors to consult this expanded set of
client information prior to making investment strategy recommendations throughout the client
relationship, implying that the information captured at the beginning of the client relationship
must be kept up to date and accessible through the customer relationship management systems
or the advisor desktop.
In the United Kingdom, the FSA has been very aggressive in examining suitability practices and
with publishing both the poor and the best ones. In early 2013, the FSA announced it had carried
out 231 "mystery shops" across six major banks and building societies which resulted in severalfirms taking immediate action to make improvements to their advice processes, including
establishing better controls around the new business process2. One of the study's key findings is
that advisors did not gather enough information about the client or prospect to ensure their
advice was suitable in 15% of the cases.3
Regulators and clients require financial advisors to invest more time and effort into
understanding their clients' holistic financial picture and ensuring that the products they
recommend are in their clients' best interest. This time and effort increases the cost of delivering
financial advice at a time when revenue has not yet recovered from the financial crisis. To
achieve this level of client focus, financial advisors need to spend less time on low-value-added
tasks, such as filling out paperwork and routing documents. Client-facing onboarding tools that
clients can fill out on their own, through Web or mobile interfaces, or in collaboration with
2. Mystery shopping is a tool used to gather information about an establishments products or servicesfor the purpose of assessing quality and/or monitoring regulatory compliance. The mystery shoppers
identity and purpose is generally not known by the establishment under review.
3. A mystery shopping review:Assessing the quality of investment advice in the retail banking sector,FSA, February 2013. http://www.fsa.gov.uk/static/pubs/other/thematic_assessing_retail_banking.pdf
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financial advisors through a user-intuitive device that can also image documents (e.g., tablet
devices with embedded cameras), give advisors more time to understand their clients and more
time to analyze the information clients provide.
MORTGAGE DIVISIONSince 2008, banks have viewed mortgages, and more importantly compliance, as a major
disruptor in any attempt to automate or initiate self-serve opportunities for customers involved
in refinancing an existing residential real estate loan or in a new home purchase. Regulators have
crafted and changed rules with depressing frequency, modifying guidance almost as soon as it is
implemented. The worst for some lenders is the uncertainty of what the "final" guidance will be
along with tight implementation deadlines.
Documentation requirements in both origination and closing processes, policy changes in
underwriting, and distribution requirements to both servicers and secondary markets have
elongated the adjudication process and kept IT resources engaged with little time for
discretionary projects. Table B demonstrates the explosion of final rules that impact themortgage loan application and decision process produced in just the first three months of 2013.
Table B: New Rules and Revisions Drive Up Onboarding Costs, No End In Sight
Final rules issued Q1 2013 Process changes required
Loan originator compensation
requirements under the Truth in
Lending Act (Regulation Z)
Revision to license and compensation requirements for
mortgage loan originators and financing of single premium
credit insurance
Appraisals for higher-priced
mortgage loans
Creditors must obtain an appraisal or appraisals meeting
certain specified standards, provide applicants with a
notification regarding the use of the appraisals, and give
applicants a copy of the written appraisals used
Disclosure and delivery
requirements for copies of
appraisals and other written
valuations under the Equal Credit
Opportunity Act (Regulation B)
Provide applicants free copies of all appraisals and other
written valuations developed in connection with an
application for a loan to be secured by a first lien on a
dwelling, and notify applicants in writing that copies of
appraisals will be provided to them promptly
Real Estate Settlement Procedures
Act (Regulation X)
New wording in RESPA documents addresses servicers'
obligations to correct errors asserted by mortgage loan
borrowers, to provide certain information requested by
such borrowers, and to provide protections to such
borrowers in connection with force-placed insurance
High-cost mortgage and
homeownership counseling
amendments to the Truth in Lending
Act (Regulation Z)
Expands the types of mortgage loans that are subject to the
protections of the Home Ownership and Equity Protections
Act of 1994 (HOEPA), revises and expands tests for coverage
under HOEPA, and imposes additional restrictions on
mortgages that are covered by HOEPA, including a pre-loan
counseling requirement
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Final rules issued Q1 2013 Process changes required
Homeownership counseling
amendments to the Real Estate
Settlement Procedures Act
(Regulation X)
Imposes certain other requirements related to
homeownership counseling, including a requirement that
consumers receive information about homeownership
counseling providers
Ability to repay and qualified
mortgage standards under the Truth
in Lending Act (Regulation Z)
Requires creditors to make a reasonable, good faith
determination of a consumer's ability to repay any
consumer credit transaction secured by a dwelling
(excluding an open-end credit plan, timeshare plan, reverse
mortgage, or temporary loan) and establishes certain
protections from liability under this requirement for
"qualified mortgages"
Escrow requirements under the
Truth in Lending Act (Regulation Z)
Requires establishment of escrow accounts for higher-
priced mortgage loans secured by a first lien on a principal
dwelling; the rule lengthens the time for which a mandatory
escrow account established for a higher-priced mortgage
loan must be maintained; also exempts certain transactions
from the statute's escrow requirement
Sources: 2013 CFPB publications
In addition, lenders report lengthy decision times and high costs to banks and borrowers due to
the inability (or unwillingness) of most mortgage processing groups to automate either the loan
origination or the onboarding process. Aite Group's 2012 CIO survey revealed that well over half
of bank CIOs are unsatisfied with their mortgage loan origination technology capabilities
mortgage loan origination IT capability has the lowest satisfaction ratio (35%) for credit
processes (Figure 3). At the same time, banks have impetus to move ahead in the next two
years. Over half of bank CIOs seek to be "stellar" with mortgage loan origination and almost half
of CIOs surveyed see IT spending in the area of mortgage loan origination increasing over a two-
year periodmore than any other segment of consumer credit.
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Figure 3: Banks Aim for Technology to Improve Mortgage Loan Origination Processing
Source: Aite Group's global survey of banks with more than US$10 billion in assets, Q2 2012
Yes No
Be
good
enough
Be
stellarDown Flat Up Build Buy
Out-
source
Bring
in-
house
Hire IT
services
vendor
Consumer loan
origination39% 61% 53% 47% 3% 60% 37% 43% 43% 10% 7% 17%
Mortgage loan
origination35% 65% 36% 64% 4% 48% 48% 40% 40% 16% 8% 12%
Credit
decisioning56% 44% 38% 62% 0% 71% 29% 40% 36% 12% 12% 8%
Mortgage loanservicing
48% 52% 54% 46% 9% 52% 39% 33% 33% 8% 4% 4%
Default
management46% 54% 57% 43% 4% 65% 30% 43% 48% 4% 0% 9%
Small-business
loan origination38% 62% 46% 54% 4% 58% 38% 40% 48% 8% 4% 20%
Average 44% 56% 47% 53% 4% 59% 37% 40% 41% 10% 6% 12%
Color coding is applied by column section: Red=lowest value, Yellow=midpoint, Green=highest value
Q. Please help us understand your institution's IT initiatives in consumer lending. (Average N=26)
Firm's
satisfaction
withcapability
Firm's goal
with capability
24-month IT
spending forecast
Likelihood to ...
(Check all that apply)
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SEVEN ATTRIBUTES OF A MATURE AND CLIENT-
FOCUSED ONBOARDING PROCESS
This section explores the characteristics of a mature and highly efficient onboarding process. To
compete in an always connected, highly informed, multidevice environment, banks require anonboarding process that is
Efficient to meet clients' expectations for speed while managing regulatory risks
Automated, with the workflow tools necessary to automate and track the
completion of process steps
Multichannel, taking advantage of mobile and Web technology to capture images,
documents, and data using the devices customers and financial services
representatives already carry
Client-aware and can treat clients differently based on their prior experience with
the bank (new-to-bank or existing) and their life stage
Able to extract data from pictures of the physical documents that will always be a
critical input to the onboarding process
Visible and responsive, providing front-office staff with transparency over the
process and alerts
Consistent across channels and devices to ensure that the customer's experience is
best in class no matter how the customer chooses to engage with the bank
EFFICIENT: TARGET ACCOUNT OPENING CYCLE TIMES
What processing times should banks strive to achieve to meet client service expectations,
manage risk, and comply with regulatory requirements? The answer differs by product due to
differences in regulatory requirements and product risk profiles (for clients and banks).
R E T A I L D E P O S I T S
The primary goal of an effective onboarding process for retail deposits (checking, savings, CDs,
and money market accounts) is to approve and fund all qualified, legitimate applicants in an
efficient, automated single session, with minimal risk of fraud. Consumers apply online primarily
because they expect the process to be fast and simple and to spare them from a trip to thebranch. In order to offer a real-time onboarding experience, the process must include
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Real-time identity verification designed to screen out fraudsters and comply with the
customer identification program (CIP)4
and "Know Your Customer" (KYC) regulations
Real-time funding verification designed to help financial institutions determine
whether applicants are making authorized deposits to fund the new account
Real-time account funding, allowing initial funding of the newly created account
B R O K E R A G E
Banks should target to open and fund standard brokerage accounts within one business day
from the time the client agrees to open the account (Figure 4). For fee-based accounts, the
process stretches to one and a half to two business days to allow for the development of the
investment proposal and the home office review process, which can take more time than for a
brokerage account when portfolios veer from standard, packaged products. A highly efficient
managed account opening process is one in which funds are ready to be traded the day after the
investment proposal is signed off by the client. Achieving these time frames consistently requires
onboarding systems that can capture application information and identify and communicate anyerrors immediately to advisors and clients. Onboarding solutions should be able to send
messages to advisors and clients about the status of the account opening process across devices
and communications channels (text message, email, and client portal).
Figure 4: Brokerage and Managed Account Processing Times in the United States
Source: Aite Group Survey of 515 U.S. financial advisors, March 2012
4. A joint regulation (FDIC, NCUA, U.S. Treasury, OTS) to implement section 326 of the U.S. Patriot Actand require banks, savings associations, credit unions, and certain non-federally regulated banks"" to
have a customer identification program"".
19%
23%
24%
36%
21%
24%
19%
27%
16%
20%
24%
18%
32%
27%
24%
11%
8%
4%
5%
5%
Fee-based/managed
Brokerage
Fee-based/managed
Brokerage
Small/midsize
(n=143)
Largefirm(n
=66)
Q. What is the account opening cycle time, measured in days between receipt ofthe client agreement, to open an account and funding of a new account
for the following account types?
Real time Not real time, but same day 1 day 2 to 4 days 5 to 7 days 8 to 14 days
Avg.
1.1
1.3
1.6
2.0
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AUTOMATED WORKFLOW
Achieving the account opening time frames discussed above across accounts requires an
automated onboarding workflow. An automated workflow routes electronic data and documents
(document images) to the applications and approvers that need to analyze the information.
Workflow tools should also be able to track the completion of process steps and kick off the next
step in the process.
R E T A I L B A N K S
Scalability for opening retail deposit accounts is achieved by eliminating the manual components
of the onboarding process. Applicants need to be able to complete the application and get real-
time feedback in one single session. The workflow automation is centered on the following
components:
Real-time identity verification. This step is designed to screen out fraudsters and
comply with the CIPand ""KYC regulations. Even as the applicant fills out the
application, financial institutions can begin to reach out to third-party data providers
that compile public records, credit bureau files, and government data to assess the
validity of the Social Security number, driver's license, passport, and address
information the applicant has provided. It also includes real-time screening against
government watchlists, including the OFAC Specially Designated Nationals,
Sanctioned Programs and Sanctioned Countries, and Palestinian Legislative Council
(PLC) lists, as well as out-of-wallet challenge questions. Ideally, this process is
automated and will generate an approval or a rejection decision immediately.
Real-time funding verification. This process is designed to help financial institutions
determine whether applicants are making authorized deposits to fund the new
account. Verifying account ownership is done via three methods; however, only two
are real time. data analysis uses third-party data providers or account aggregationwhereby the applicant provides login information to the funding account, enabling
the financial institution to confirm information in real time. Another method
commonly used is known as micro-deposit or trial deposit authentication, whereby
the financial institution makes small deposits into the funding account and asks the
applicant to verify the amounts. This process typically takes two days or more.
Real-time account funding. This process will allow initial funding of the newly
created account. Real time is achieved by the applicant using an existing debit/credit
card or by an account-to-account transfer within the financial institution if the
applicant has an existing account. Another method commonly used is funding the
account via ACH processing; however, this process typically takes two days or more.
Enhanced customization of rules for applicant approval, cross-selling of multiple
financial products, and funding transactions.
Integration with core systems or other systems of record for true straight-through
processing.
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W E A L T H M A N A G E M E N T
While more than half of financial advisors indicate that they are able to open brokerage accounts
within one business day, the reality is that this process breaks down in too many instances.
Reducing the percentage of accounts with errors (not-in-good-order accounts) is an important
objective of many advisors and wealth management firms. The wealth management onboarding
workflow is in dire need of automation today. An Aite Group survey of just over 500 U.S.financial advisors conducted in March 2012 reveals that more than one-third of financial
advisors still consider filling out paperwork by hand to be their primary method of opening
accounts. Paper-based applications increase the potential for errors and limit the firm's ability to
find and fix errors quickly.
This study also found that less than half of financial advisors surveyed have access to onboarding
solutions that automate the approvals workflow (e.g., submitting to a compliance officer for
approval) and tracking the approval (Figure 5). Only one-third of advisors indicate that their
account opening systems are integrated with other business applications, including customer
relationship management (CRM) and document management systems. This lack of integration
significantly limits the automation of the onboarding workflow and the ability to analyzeapplication data for compliance, marketing, and sales purposes in a timely manner.
Figure 5: State of Workflow Automation in U.S. Brokerage Accounts
Source: Aite Group survey of 515 U.S. financial advisors, March 2012
M O R T G A G E S
Accepting and adjudicating a residential mortgage application is a labor-intensive, document-
centric, frequently regulator-scrutinized process that typically represents the single largest and
most stressful action for a consumer. Further adding to initial processing delays is the U.S.
market approach to funding these loans, which usually includes a transfer of the complete loan
and its documentation to one third party for purchase and to another for servicing. The original
33%
37%
48%
Integrates with otherbusiness applications (e.g.,CRM, imagin g, workflow)
Enables anelectronic/paperless
workflow
Tracks an d enables accountand product approvals
workflow
Q. For brokerage accounts, please indicate the extent towhich account opening systems and processes provide
the following capabilities.(Percentage of advisors indicating the solution
"completely provides" capabilities, n=211)
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bank's goal is to keep this customer and gain the opportunity to reach further into the customer
wallet.
For customers, process time is critically important; in the past, institutions have worked to
streamline and automate this process as much as is feasible. Studies have shown that consumers
want to initiate mortgage loans from online channels and that the largest impediments have
been document delivery and electronic signatures. Mobile devices that have the capability to
take and transmit picturesalong with applications and signaturesand to receive necessary
documentation has become the middleware that moves the online channel to full service for
receipt and adjudication of loan applications. These devices are critical if firms want to achieve
the low end of the processing time frames shown in Figure 6.
Figure 6: Mortgage-Origination Process
Source: 2013 Aite Group
MULTICHANNEL WORKFLOW
A mature onboarding solution is one that can support a multichannel workflow (Table C). Some
applicants are comfortable providing personal information such as their Social Security number
and driver's license online, while others are more comfortable providing such data over the
phone or at the branch. By supporting multiple channels, the onboarding process provides
maximum flexibility to the financial institution and the applicant. The entire application can be
Prequalification
Product selection
Application
completion
Loan registration
Rate lock
Loan submission
Property
appraisal
Compliance
documents
Pricing, delivery, and
processing decisions
made (includes good
faith estimates)
0 to 20 days
Credit reportand models
Other scoring
models (ID)
and documents
(Pay)
Automated
credit policies
Appraisal
evaluation
Commitment
issuance
Credit, property,
loan approval
decisions made
2 min. to 20 days
Automated mortgageinsurance U/W
Commitment condition
compliance
Survey, title, insurance,
etc. ordering
All document
preparation
Closing instructions
Signatures
Funding authorization
Post-closing
document
tracking
Servicing system
setup
Loan package
audit
Shipping
Investor pool
placement
Vendor services ordered and
MI decision made (Includes
RESPA)
3 to 30 days
Investor placement,
servicing rights and
decisions made
3 to 60 days
ApplicationPost-Closing and
DeliveryPre-Closing and ClosingUnderwriting
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completed in a single channel (online, branch, or call center) or can occur across multiple
channels. Items that are most easily completed online, like acceptance of terms and conditions
or completion of an e-signature, can be done in the online channel, while other items can be
completed in the branch or call center. Multichannel support also gives the financial institution
the ability to proactively reach out to applicants who have started but not completed the
onboarding process. With a multichannel workflow tool, applications that stagnate can beproactively moved toward completion.
Table C: Multichannel Approach to Onboarding Workflow
Onboarding Stages Channels Used
Build awareness Mass media, social media, direct marketing, financial
institution's website
Create interest Social media, search engines, branch, ATM, financial
institution's website, direct mail
Acquire client Branch, call center, financial institution's website, financialinstitution's mobile app
Engage client Branch, call center, ATM, financial institution's website, social
media, direct mail, online banners
Cross-sell client Branch, call center, outbound phone campaign, ATM, financial
institution's website, direct mail, online banners, outbound
email program
Retain client Branch, call center, outbound phone campaign, ATM, financial
institution's website, direct mail, online banners, outbound
email program
Source: Aite Group
When selecting an onboarding solution for multichannel deployment, banks should keep in mind
that the solution should support the following:
Customization of the user interface to integrate seamlessly with other online and
mobile properties
The ability to efficiently change the user interface and business rules across multiple
devices through one centralized application
The ability to optimize the content displayed given the screen size and the operatingsystem
Integration with systems of record, including hosted and home systems to ensure
the application data is available to all agents and processes required to complete the
onboarding process and service the customer thereafter
Pre-filling of online forms for existing customers with existing customer information
(regulatory constraints may prevent pre-filling of some sensitive client information);
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this not only saves existing customers some time but also demonstrates to
customers that the bank knows them
T H E B E N E F I T S O F M U L T I C H A N N E L O N B O A R D I N G T O T H E W E A L T H
M A N A G E M E N T I N D U S T R Y
In the wealth management group, providing customers with the ability to open accounts online,
or at least start the online account/origination process online, saves financial representatives'
time with gathering client information and filling out forms. Despite these benefits, very few
wealth management firms allow clients and prospects to open accounts or start the onboarding
process through the client portal. An Aite Group financial advisor survey of 529 U.S. financial
advisors conducted in January 2013 reveals that clients of only 17% of financial advisors have
access to an online portal that enables online account opening, and clients of one-third of
financial advisors can upload documents to the client portal to share with advisors (including
document images and statements; Figure 7).
Figure 7: Availability of Online Onboarding Capabilities for Investment Accounts
Source: Aite Group survey of 529 U.S. financial advisors, January 2013
Financial advisors whose clients have access to these capabilities are more likely than other
advisors to state that their client portal saves them time with gathering client data/information
and that the client portal has driven clients to bring more assets to the firm (Figure 8). These
advisors are also more likely to indicate that the portal keeps them better informed of their
clients' financial livesallowing clients to complete application forms electronically provides a
one-point-in-time snapshot of their financial information which they are likely to continue to
update after investing the initial time entering the information. Access to updated client
information on a continual basis generates multiple benefits, including faster account opening
for subsequent accounts, better (and more compliant) advice delivered, and deeper advisor-
client relationships.
27%
17%
Upload documents to
share with advisors orto s tore key financial
documents
Start/complete theclient onboarding/new
account process
Q. What can clients accomplish on yourfirm's client site/portal?
(n=306 U.S. financial advisors)
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Figure 8: Benefits of Providing Online Account Opening Capabilities Through the Client Portal:
Wealth Management Firms With Online Account Opening vs. Firms Without
Source: Aite Group Survey of 529 U.S. financial advisors, January 2013
In addition to making the application available online for clients to open accounts on their own,
wealth management firms should consider enabling financial advisors to open accounts with
clients during the client meeting. Many financial advisors are already leveraging their tablet
devices to guide their meetings. They should be leveraging these devices to fill out application
forms either by handing the tablet directly to the client or by filling the form out on behalf of
their clients. This approach is likely more suitable for high-net-worth clients, who may expect a
high-touch service from their advisors. Advisors can make the in-meeting application processeven more efficient when they come to the meeting with applications already partly filled, or
when they can leverage mobile applications (smart phone or tablet) to take pictures of
documents (i.e., a passport or a driver's license). The benefits to advisors of completing an
application process through a tablet device during a client meeting are multiple and include
advisors' ability to
Demonstrate value by helping clients complete a process that they may usually be
responsible for
Complete the sales process in one interaction
Leave the meeting with validated forms
Avoid carrying (and losing) physical documents and paperwork that contain sensitive
client information
Speed up the account opening process and other downstream processes by
immediately transmitting client information to workflow, document management,
financial planning, CRM, and other advisor applications
9%
17%
29%
24%
31%
47%
Drives cl ients to bringmore of their assets to
the firm
Keeps me informed ofmy clien t's complete
financial life
Saves time withgathering clientdata/information
Q. In your opinion, what top 3 benefits does the client site provide to youand your practice? (Advisors with client portals that enable accountopening vs. advisors without online account opening capabilities)
Financial advisorclients canstart/complete theon boarding processon line (n=51)
Financial advisorclients can'tstart/complete theon boarding processon line (n=255)
Percentages differ s ignificantly from oneanother across responses
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Wealth management firms have barely scratched the surface of the possibilities the tablet device
offers to enhance advisor client collaboration and relationships. While several private banks
leverage tablet devices to deliver prepared portfolio reviews and other documents to clients, few
advisors report using their tablet devices to complete interactive and collaborative processes
with the client, including financial planning and gathering client information and documents
(Figure 9).
Figure 9: Financial Advisor Applications Available on Tablet DevicesU.S. Financial Advisors
Source: Aite Group Survey of 529 U.S. financial advisors, January 2013
While wealth management firms are only at the beginning stages of offering online and mobileaccount opening capabilities, mortgage departments are further along. Mortgage loan
origination solution providers see growing requests for mobility tools and channel delivery, with
particular focus on e-doc delivery and signatures as well as the electronification of processes
listed in Figure 6 above.
CLIENT AWARENESS
The onboarding process must be aware of who the customer is. It should treat existing bank
customers, for example, differently than brand-new customers. Modifying the process for
existing clients and avoiding recapturing/rekeying of information that the client has alreadyprovided for another line of business will speed up onboarding and improve customer
satisfaction.
The use of data analytics and the development of a customer-specific approach rather than
pushing products to a large group of customers are other elements contributing to onboarding
success. This can be achieved by collecting key customer data or insights to better understand
and serve the customer, including understanding channel, communication and language
preferences as well as the customer's life stage. The benefits of using this information include
9%
8%
6%
4%
2%
Advisor dashboard (bookoverview, alerts, etc.)
Customer relationshipmanagement (CRM)
Broker workstation
Financial planning
Document management(in cluding imaging and
workflow)
Q. Please indicate whether the following applications areavailable to you via a tablet device. (n=408)
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minimizing abandonment and maximizing adoption (Figure 10). Other data attributes that may
drive targeted messaging for deposit account holders are direct deposit flag, online banking
usage, online bill pay usage and biller data, debit card, average account balances, total number
of products/services, homeownership status, and household income.
Figure 10: Client Awareness Maturity Level for Onboarding
Source: Aite Group
EXTRACTS DATA FROM PHYSICAL DOC UMENTS
When applying for accounts and loans, customers must submit copies of government-issued
documents and, for certain products and processes (as is the case with mortgage originations),
bank representatives must indicate that they have seen original copies of these documents.Tablets and mobile devices can now take pictures of these documents when presented in
branches, thus allowing banks to upload their images to internal systems. But, these devices do
not come with the ability to extract data from these documents to populate account opening
applications. Banks required specialized mobile applications with imaging and data extraction
capabilities to achieve auto population of forms and trigger the rest of the onboarding workflow.
Imaging and data extraction capabilities are particularly important for mortgage departments to
acquire today in light of banks' requirements to better measure credit risk as part of Basel III
Sends outbound
messages to broad
customer groups
on a regular basis
Sends outbound
messages to customer
groups in response to
specific events or
actions such as new
account opening or
account balance
threshold
Targets a segment of
customers that are
experiencing a life-
change event such as
purchase of a new
home or preparing for
retirement
Life stage
marketing
Event-based
marketing
Mass
marketing
Life cycle
marketing
Customer intimacy
High
High
Low
Targets individual
customers basedon their unique
attributes and
engagement with
the financial
institution based
on data modeling
and database
marketing
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stress testing. Mortgage departments are reviewing historical loans in paper format to measure
their exposure or to review the historical process. Imaging these paper documents in order to
automatically extract and analyze the information they contain would eliminate significant
manual work.
An additional significant pain point in mortgage processing is that many mortgage wholesalers,
servicers, and government sponsored entities are being required to buy back mortgage loans
originally sold into the secondary market. This is usually because the portfolio investors or their
agents made the case that the institution failed to follow its credit policies and procedures when
adjudicating these loans and are therefore responsible for losses. Banks and servicers struggle
to work manually through processes of ten or more years ago in order to reduce the institutions
loss exposure. Complicating the effort are bank mergers (sometimes two or three) that make it
virtually impossible to pinpoint the policies in place at the time of application. The human
resource cost alone is staggering as workers search for the cause of each distressed loan one
loan at a time. Results are predictably abysmal. Coupled with automated analytical tools,
document imaging and data extraction capabilities would provide significant time savings and
more accurate results.
VISIBLE AND RESPONSIVE
Onboarding processes that are electronic from beginning to end can be tracked, reported on,
and managed. As the client's application data and documents cycle through the multistep
process, the various actors involved in the process must be kept up to date. In particular, when
errors are identified in the application data or when the process is stalled for longer than
expected, process stakeholders must be informed immediately. As more and more sales and
service agents, financial advisors, and loan officers carry mobile phones and tablets, they should
be able to obtain messages or alerts about the process through these devices as well as through
their work desktops or email inboxes. Clients should also be informed of issues in theirapplication as they occur, particularly if the onboarding process is stalled because they need to
provide additional information or documents. A mature onboarding solution would have the
ability to automatically generate an email or text message informing the client to take action.
In wealth management departments, financial advisors request alerts when an application is not
in good order. With this information at hand, the advisor can be proactive and help resolve the
issues or, at a minimum, use this information to assuage any client concerns regarding the
process delay. Aite Group's 2012 financial advisor survey showed that financial advisors who say
they have complete visibility into the onboarding process report that they have higher firm
satisfaction compared to financial advisors who say they have no visibility into the process
(Figure 11). Investing to improve onboarding process visibility can have a direct impact on thebottom line of wealth management firms if these initiatives increase advisor satisfaction and
retention.
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Figure 11: Advisor Firm Satisfaction Correlates With High Account Opening Process Visibility
Source: Source: Aite Group survey of 515 U.S. financial advisors, March 2012
CONSISTENT ACROSS BUSINESS LINES AND CHANNELS
As the onboarding process expands into new channels to take advantage of mobile technology
and to better meet the needs of clients, banks must ensure that the onboarding experience and
core process steps are consistent across channels. Standardization across channels and devices is
important not only from a branding and client experience perspective but also when meeting
compliance requirements. An online onboarding process typically complies with the same core
regulatory requirements as an offline process. While processes will be, and should be, different
across channels based on the constraints of the device and differences in the sales process, the
look and feel and the core business and regulatory requirements should be the same.
46%
59%
70%
34%
29%
22%
20%
12%
7%
Does not provide (n=35)
Partially provides (n=69)
Account opening solution
provides complete visibility(n=108)*
Visibility Into Brokerage Account Opening Process vs.Level of Satisfaction With Firm
Satisfied or very satisfied Areas of d issatisfaction and satisfaction Unsatisfied or very unsatisfied
Percentage outlined by a square differs significantly from percentage outlined by a circ le
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CONCLUSION
Across the globe, banks have been undergoing tremendous change since the financial crisis of
2008. These adjustments have been driven largely by profitability pressures and changing
investor preferences. While banks may look to the myriad regulatory requirements and conclude
that they cannot afford to allocate much to client experience initiatives, they must reconsiderthis assessment and identify initiatives that can both meet the needs of regulators and ensure
their long-term competitiveness. Banks that fail to incorporate mobile and Web technologies to
enable their client-facing processes will be left behind. Here's why:
Aite Group's recent research on investors reveals that young investors, including the
future high net worth, are prepared to shift their assets to firms that can provide
them with more convenient services and more online/mobile tools. Providing this
generation of investors with a time-consuming and paper-intensive onboarding
process will give them the impression that the firm will not be able to meet their
ongoing needs for convenience in their financial lives.
More and more financial services representatives, including financial advisors and
mortgage loan officers, will consider a firm's technology capabilities as an important
factor in their workplace decision. Firms that provide a highly inefficient working
environment in which they are left in the dark about the status of their customers'
processes will be unappealing to the new generation of representatives.
Regulators across the globe will continue to ensure that financial institutions are
delivering solutions that are in the best interests of customers and that they are not
taking undue risks. To accomplish these objectives, regulators will require more
documentation of the sales process and they will investigate this documentation.
Firms that are still storing key client documents in paper format will have trouble
responding to information requests of regulators in a cost-effective manner.
Banks should look to solutions that are adaptable to changing customer preferences
and changing regulatory requirements. Application forms and underlying business
rules will change often. Solutions that enable banks to efficiently change the user
interface and business rules across multiple devices through one centralized process
should be prioritized.
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ABOUT KOFAX
Kofax plc (LSE: KFX) is a leading provider of innovative smart capture and process automation
software and solutions for the business critical First Mile of customer interactions. These begin
with an organizations systems of engagement, which generate real time, information intensive
communications from customers, and provide an essential connection to their systems of record,which are typically large scale, rigid enterprise applications and repositories not easily adapted
to more contemporary technology. Success in the First Mile can dramatically improve an
organizations customer experience and greatly reduce operating costs, thus driving increased
competitiveness, growth and profitability. Kofax software and solutions provide a rapid return on
investment to more than 20,000 customers in banking, insurance, government, healthcare,
business process outsourcing and other markets. Kofax delivers these through its own sales and
service organization, and a global network of more than 800 authorized partners in more than
75 countries throughout the Americas, EMEA and Asia Pacific. For more information, visit
kofax.com.
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ABOUT AITE GROUP
Aite Group is an independent research and advisory firm focused on business, technology, and
regulatory issues and their impact on the financial services industry. With expertise in banking,
payments, securities & investments, and insurance, Aite Group's analysts deliver comprehensive,
actionable advice to key market participants in financial services. Headquartered in Boston witha presence in Chicago, New York, San Francisco, London, and Milan, Aite Group works with its
clients as a partner, advisor, and catalyst, challenging their basic assumptions and ensuring they
remain at the forefront of industry trends.